Page 113001HSL Semester 2, 2009Week 11: Strategic Change2Learning objectivesTo understand:How this week’s reading and lecture link to material from previous weeks

How the management of organisational change is vital to successful strategy implementation

Different approaches to and types of organisational change

3StrategicDirectionStrategy Formulation(corporate and business level)Strategy Implementationand ControlStrategic RestructuringInternal and External Analysis4•Focus is on planned systemic change developed and implemented to retain competitive advantage.

•Pressures for change may emerge from the organisation’s environment, or from within the organisation itself.

•“The most unchanging aspect of organizational life is the existence of change itself”(Bedian& Zamuto, 1992, p. 23).

•“To survive and grow . . . managers need to be able to adapt their organisationsto changes in environment, size, strategy, and technology”(Amis & O’Brien, 2001, p. 87).

The concept of changePage 2

5Restructuring approaches•Refocusing Assets: Down-scoping and/or acquisitions•Retrenchment: Down-sizing•Leveraged Buyout (LBO)•Changes to OrganisationalDesign and structure6Organisational changeTechnologyStructure and SystemsProducts and Services

People

E.g., changes in production processes, knowledge

E.g., changes in division of labour, authority structures, control mechanisms

E.g., Changes in

personnel, & the ways people act, think, relate to one another

E.g., the addition, deletion or modification of markets served

7Therefore, the challenge for management is to avoid a “trajectory of decline”by balancing the paradoxical (and simultaneous) need for change and stability.Change as paradoxManagement must alsostay ahead of competitors in the pursuit of new markets, new technology, and innovative means for service delivery if the organisation is to be successful.Management prefers predictability in access to resources, production, costs, and people; all of which must remain relatively fixed if the organisation is to be successful. However,. . . 8Perspectives on change•Rationalchange perspectiveSequential, planned search for optimal solutions•Learning approach to changeChange occurs through a series of small steps of experimentation and action

•Cognitive approach to changeA change in managerial and employee cognition must occur before behaviour will changePage 3

9Integrating the change perspectives •The three perspectives (rational, learning, cognitive) suggest quite different approaches to managing change•Each perspective adds a useful dimension•All perspectives should be included in the change process•Therefore, it is important to be aware of both the contentand the processof change10•The amount and type of change required comes from the gap analysis performed during the analysis phase

•If the gaps are large –transformationalchange will be required

•If the gaps are small –incrementalchange will be appropriate

How much change?

11Time and resources available •The nature of change in strategy implementation can be:Incremental(evolutionary)or,Transformational(revolutionary)•Changes may be:reactions to unexpected conditions or, proactive results of good planning•Time and resources impact on change style:the amount of time and resources availablethe available management style, e.g., in times of crisis, coercive leadership styles may be required.This may lead to thisPreferably though, good planning will help facilitate this12Incremental change processes•Incremental change requires small movements from the current setof operational practices

Fine tuning:•Refining policies, procedures etc

•Creation of specialisedunits and linking mechanisms•Fostering individual and group commitment•Confidence in status quoIncremental adjustments:•Expansion in sales territory•Small shift in products and/or services offered•Minor changes in process technology

The overall system adapts, but is nottransformedPage 4

13“STRATEGIC DRIFT”Transformational change•With good strategic analysis and planning, incremental changes will usually suffice, and there would be little or no need for transformational change. However . . . •Periodically, organisations can get out of alignment with their environment, and widespread (or transformational) change is required•Transformational change can be triggered by an organisational crisis, such as:an event in the external environmentchange in internal managementan internally created ‘crisis’to shake up the organisation•Transformational change often involves the replacement of senior management14•Transformational change occurs in response to, or preferably, in anticipation of, major environmental changes –changes that require more than just incremental adjustments